Ethereum (ETH) price experienced a setback recently, dropping back to the $3,400 support level after briefly surpassing $3,500. This delay in price movement can be attributed to the postponed full approval by the SEC for Ethereum ETF applications, which were originally expected to be approved by July 2 but are now scheduled for July 8. Bloomberg ETF expert Erich Balchunas mentioned on social media that the SEC took extra time to provide feedback, resulting in a revised timeline for approval.
Despite the setback in approval, asset managers remain optimistic about the potential greenlighting of the first US spot Ethereum ETF applications. There is a constructive dialogue between asset managers and the regulator, with minor questions raised by the SEC that issuers are currently addressing. Steve Kurz, head of asset management at Galaxy Digital, expressed confidence in the approval process, citing the firm’s experience with the Bitcoin ETF.
Ethereum ETFs have the potential to attract significant inflows in the initial months of trading, although they may not reach the same level of demand as the newly approved Bitcoin ETF market. Bitwise’s Chief Investment Officer projected that these ETFs could see $15 billion in net inflows within their first 18 months of trading, with the expectation that investors will allocate proportionally to Bitcoin and Ethereum ETPs.
US investors have already invested $56 billion in Spot Bitcoin ETPs, with expectations for this figure to surpass $100 billion by the end of 2025. To match the success of Bitcoin ETFs, Spot Ethereum ETFs would need to attract $35 billion in assets, a process that could take around 18 months. It is also worth noting that Spot Ethereum ETFs are expected to launch with $10 billion in assets, thanks to the conversion of the Grayscale Ethereum Trust into an ETF.
While the delay in approval by the SEC may have dampened short-term expectations for Ethereum ETFs, there is still a significant level of optimism among asset managers. The potential for significant inflows and demand exists, with comparisons to the success of Bitcoin ETFs serving as a benchmark for future performance. As the regulatory landscape evolves and approval processes move forward, the future of Ethereum ETFs remains promising, albeit with some challenges along the way.
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